Türkiye charges VAT (KDV) under the Value Added Tax Law, Law No. 3065, at a general rate of 20% and reduced rates of 10% (such as restaurant meals, hotel stays and medicines) and 1% (many basic foods, newspapers), in force since 10 July 2023. A business trading in Türkiye is a VAT taxpayer from its first sale, with no turnover threshold. The No. 1 return is filed and paid monthly by the 28th of the following month, the No. 2 return by the 25th. Turkish buyers self assess VAT on services from abroad, qualifying exports are exempt, and visitors can reclaim VAT on goods they take out of Türkiye.
Value added tax, known in Türkiye as katma değer vergisi or KDV, is the tax most foreigners meet first and understand least. It is built into almost every shop price, it appears on every invoice a Turkish company issues, it can add up to 20% to the price of a new flat bought from a developer, and it can be reclaimed at the airport if you are a visitor taking goods home. The general rate has been 20% since 10 July 2023, when Presidential Decision No. 7346 raised it from 18% and lifted the former 8% reduced rate to 10%. This guide explains how the Value Added Tax Law, Law No. 3065, works in 2026 for the people who most often ask us about it: foreign owners of Turkish companies, businesses abroad selling services to Turkish customers, professionals invoicing clients overseas, tourists claiming refunds and buyers and sellers of property.
Under Article 1 of Law No. 3065, VAT applies to deliveries of goods and services carried out in Türkiye within commercial, industrial, agricultural and professional activities, to imports of all kinds of goods and services, and to a list of other transactions such as the leasing of property and rights and the organisation of games of chance. The same article states that the nationality of the person carrying out the activity, and whether that person has a residence or seat in Türkiye, does not change the nature of the transaction or prevent taxation. A foreign company is therefore treated in exactly the same way as a Turkish one.
Whether a transaction takes place in Türkiye is decided by Article 6. Goods are taxed in Türkiye if they are located in Türkiye at the time of delivery. Services are taxed in Türkiye if they are either performed in Türkiye or benefited from in Türkiye. This second test, the benefit test, is the key to most cross border questions: it is why a Turkish company buying software from abroad owes VAT under the reverse charge (section 5 below), and why a Turkish consultant advising a client abroad may be able to invoice without VAT (section 6 below).
The mechanism is the familiar one. Each registered business charges VAT on its sales, deducts the VAT it paid on its own purchases under Article 29, and pays the difference to the tax office. The final consumer, who cannot deduct anything, bears the tax.
Article 28 sets a statutory rate of 10% but authorises the President to increase it up to four times, to reduce it down to 1% and to set different rates for different goods and services and for residential property. In practice the rates are fixed by Council of Ministers Decision No. 2007/13033 and its two annexed lists, as amended many times since. Three rates apply today.
Every delivery or service that is not named in one of the reduced rate lists is taxed at 20%. This covers most services, including legal, accounting and consultancy fees, as well as electronics, furniture outside the listed codes, vehicles (which may also bear special consumption tax), commercial property and, since July 2023, cleaning products such as soap, detergent and paper towels.
The second list carries the 10% rate. Among the items most relevant to foreigners are restaurant and similar food services (excluding the alcohol element), overnight accommodation in hotels, motels and guesthouses, and medicines licensed by the Ministry of Health.
The first list carries the 1% rate. It includes many basic foodstuffs, such as bread and flour products, newspapers and periodicals, and certain agricultural products. The lists are written by reference to customs tariff codes and are amended frequently, so a business should always check the current entry for its exact product rather than rely on a general description.
Charging too little leads to an assessment of the missing tax, a tax loss penalty (vergi ziyaı cezası, the penalty for causing a loss of tax) under the Tax Procedure Law, Law No. 213, and late payment interest. Charging too much is not harmless either: under Article 8(2), anyone who shows VAT on an invoice must pay it, even if it was not due, and a refund is possible only after the returns are corrected and the excess is repaid to the buyer.
The table below summarises the main rules covered in this guide.
| Transaction | Current Rule (2026) |
|---|---|
| Most goods and services, including professional fees and commercial property | 20% |
| Restaurant meals, hotel accommodation, licensed medicines | 10% |
| Many basic foodstuffs, newspapers and periodicals, certain agricultural products | 1% |
| New residences sold by a developer | 1%, 10% or 20%, depending on the building licence date, the net area and, for older projects, location and land value |
| Export of goods and qualifying services | Exempt, with a right to recover input VAT (Articles 11, 12 and 32) |
| Services bought from a supplier abroad and used in Türkiye | Turkish buyer declares and pays the VAT (reverse charge, Article 9) |
| Goods bought by visitors and taken out of Türkiye | VAT refunded on exit (Article 11(1)(b)) |
| First sale of a home or workplace to a qualifying foreign buyer, price brought in foreign currency | Exempt (Article 13(i)) |
| Letting of property by a private landlord outside a business | Exempt (Article 17(4)(d)) |
| Return and payment deadline | 28th of the following month (No. 1 return); 25th for the No. 2 return |
Article 8 makes the person who delivers the goods or performs the service the taxpayer. Unlike many European systems, the Turkish VAT Law has no general turnover threshold for registration: a company, a branch or an individual carrying on commercial or professional activity becomes a VAT taxpayer from the start of that activity, and the VAT registration is opened with the tax office as part of the ordinary start of business. A foreigner who sets up a limited or joint stock company through company registration in Türkiye therefore owns a full VAT taxpayer from day one, and anyone dealing with the tax office first needs a Turkish tax identification number. A foreign professional who works in Türkiye with the necessary permits and registers as self employed must also charge VAT on fees, unless the export of services exemption applies.
Several groups do not charge VAT. Article 17(4)(a) exempts tradesmen exempt from income tax and traders taxed under the simplified method. Article 17(4)(b) covers farmers outside the real method and certain exempt professionals. Transactions within the scope of the banking and insurance transactions tax are exempt under Article 17(4)(e), and deliveries of shares, bonds and foreign currency under Article 17(4)(g). A private individual who sells a personal asset, such as a used car or the family home, outside any business activity is not making a taxable supply at all.
A business with no residence, place of business, legal seat or business centre in Türkiye is not normally registered. Instead, Article 9(1) allows the Ministry to make the Turkish party to the transaction liable for the tax, which is the reverse charge explained in section 5. There is one important exception: since Law No. 7061 of 2017, a foreign supplier providing electronic services to private individuals in Türkiye who are not VAT taxpayers must itself declare and pay the VAT. Streaming, app, online advertising and similar platforms therefore register with the Revenue Administration through a simplified procedure and file their own returns.
Article 39 provides for quarterly tax periods but authorises the Ministry to set monthly periods instead, and in practice taxpayers under the real method file every month. Those who are liable to withhold VAT, including under the reverse charge, file monthly under Article 39(2)(b).
The text of Articles 41 and 46 still refers to the 24th and 26th of the month, but the Revenue Administration has used its powers under the Tax Procedure Law to move the dates. Under Tax Procedure Law Circular No. 149, the main return (the No. 1 return) is filed and the tax paid by the 28th of the month following the period, for returns due from 1 December 2022. Under Circular No. 164, the No. 2 return used by those liable to withhold VAT is filed and paid by the 25th, for returns due from 1 February 2024. One off extensions are announced regularly; for example, the No. 1 return for April 2026 was extended to 5 June 2026 while the No. 2 return remained due on 25 May 2026. Returns are filed electronically, in practice by a licensed accountant (mali müşavir, a certified public accountant), and the dates sit alongside the other filings described in our guide to tax declaration deadlines in Türkiye.
Under Article 29, VAT on purchases relating to the business can be deducted from output VAT, provided the invoice is recorded in the statutory books no later than the end of the calendar year following the year in which the chargeable event occurred. If deductible VAT exceeds output VAT, the difference is carried forward and is not refunded, except in the special cases of exports, certain exemptions and reduced rate supplies. Proper invoices are essential, and most businesses now issue and receive them electronically, as explained in our guide to the e-archive invoice system.
A late or missing return attracts an irregularity penalty and late payment interest; underdeclared tax attracts the tax loss penalty under Law No. 213. Where an inspection finds goods held, or services bought, without documents, Article 9(2) gives the taxpayer 10 days to produce the purchase documents, failing which the VAT is assessed on the comparable value with a tax loss penalty. Claiming VAT on invoices that do not reflect real transactions is a criminal matter, discussed in our article on fake invoice offences.
The reverse charge, sorumlu sıfatıyla KDV, VAT paid in the capacity of a responsible party, applies when a supplier with no residence, place of business, legal seat or business centre in Türkiye provides a service that is benefited from in Türkiye. Typical examples are software licences and cloud subscriptions bought by a Turkish company, consultancy or management services charged by a foreign parent company, advertising bought on foreign platforms, design work commissioned from an overseas freelancer and royalties paid for foreign trademarks.
The foreign supplier issues its own invoice without Turkish VAT. The Turkish customer calculates VAT at the rate that would apply to the same service in Türkiye, normally 20%, declares it on the No. 2 return by the 25th of the following month and pays it. Under Article 29(1)(ç), added by Law No. 7491, the VAT paid in this way can then be deducted on the No. 1 return. For a fully taxable business the cost is mainly cash flow and paperwork, but for a business with exempt activities, or one that forgets to declare, the reverse charge becomes a real cost and a frequent audit finding.
Two practical points come up in almost every engagement. First, a contract that states a net fee for the foreign supplier does not change who owes the VAT; the Turkish company must still self assess it. Second, payments abroad can also trigger withholding of income or corporate tax, which is a separate tax with separate rules and may be reduced by a double taxation treaty.
Article 11(1)(a) exempts export deliveries and related services. Under Article 12(1), the delivery must be made to a customer abroad, or to a buyer in a special economic zone (serbest bölge), a shop selling without duties at customs (gümrüksüz satış mağazası) or an authorised customs warehouse, and the goods must leave the customs territory of Türkiye. Manufacturers who sell to an exporter on condition of export can also deliver without collecting VAT under Article 11(1)(c), provided the goods are exported within three months.
Article 12(2) sets two conditions, and both must be met. The service must be performed for a customer abroad, meaning a buyer whose residence, place of business, legal seat and business centre are abroad (or an independently operating foreign branch of a Turkish firm), and the service must be benefited from abroad. A software developer in Istanbul building an application for a German company that uses it in Germany normally qualifies. Services consumed in Türkiye, such as accommodation, work on a property located in Türkiye or representation before a Turkish authority, usually fail the second condition even when the client lives abroad. Where the position is unclear, a ruling request (özelge, an advance tax ruling) to the Revenue Administration is the safest course before invoicing without VAT.
The export exemption is valuable because, under Article 32, the VAT paid on costs relating to exempt exports can be deducted and, if there is not enough output VAT to absorb it, refunded, provided the refund is requested by the end of the second calendar year following the period of the transaction. Refund claims are examined closely and need a complete file of export documents and purchase invoices; larger claims are usually supported by a report of a sworn financial adviser (yeminli mali müşavir).
Article 11(1)(b) provides that VAT is collected when a passenger who is not resident in Türkiye buys goods to take out of the country, but is refunded when the invoice is presented as the goods leave through customs. This is the scheme that shops advertise with refund logos at the till.
The main conditions are the following:
The refund is then paid by the shop or by an authorised refund intermediary, at a counter after passport control, to a card or by later transfer. Services are never covered: hotel bills, restaurant meals, car hire and treatments are not refundable under this scheme. In practice, travellers should present the goods and documents to customs before checking in their luggage, keep the items unused and allow extra time at the airport.
Türkiye has no general refund procedure for foreign businesses that incur VAT on business trips or local purchases. Article 11(1)(b) allows refunds, subject to reciprocity, only of VAT paid by persons with no residence, place of business, legal seat or business centre in Türkiye on goods and services bought in connection with their transport activities and with their participation in fairs, festivals and exhibitions. Foreign producers of cinematographic works approved by the Ministry of Culture and Tourism can also recover VAT on qualifying purchases. Outside these cases, VAT on hotels, meals and local services is a cost for a foreign business. A business with regular expenses in Türkiye should consider whether a branch or subsidiary, which can deduct input VAT, makes more sense.
A private individual who sells a home outside any business activity does not charge VAT, because the sale is not a delivery within a commercial activity under Article 1. Someone who repeatedly builds or buys and sells property may, however, be treated as carrying on a commercial activity, with VAT and income tax consequences. Developers and companies selling property charge VAT on every sale.
Article 28 allows separate rates for residences based on the location and tax value of the land or the dwelling. The rate on a new residence is 1%, 10% or 20%, depending on when the building licence was obtained (the rules changed for licences obtained from 1 April 2022 under Presidential Decision No. 5359), the net area of the unit, with a threshold of 150 square metres playing a central role, and, for older projects, the location and the land value. Projects under Law No. 6306 on the Transformation of Areas under Disaster Risk have their own reduced rate. Workplaces, such as shops and offices, are taxed at the general 20% rate. Because the difference between rates can be large, buyers should ask the developer to state the rate and its basis in the contract, and check whether the price is quoted with or without VAT, as part of the wider cost of buying property in Türkiye.
Until July 2023, Article 17(4)(r) exempted the sale of immovable property that a company had held for at least two full years. Law No. 7456, in force from 15 July 2023, removed immovable property from that exemption, so it now covers only participation shares. Under Provisional Article 43, property already on a company's balance sheet before that date keeps the old rule. A company that buys property today should assume it will charge VAT when it sells.
Article 17(4)(d) exempts the leasing of immovable property that is not part of an economic enterprise. A foreign individual who lets out a flat in Türkiye as a private landlord therefore does not charge VAT on the rent, although the rental income is subject to income tax. A company letting property it holds as a business asset charges VAT on the rent.
Article 13(i) exempts the first delivery of a building constructed as a residence or workplace when it is sold to a foreign individual not settled in Türkiye, a Turkish citizen who has lived abroad for more than six months with a work or residence permit, or a foreign company with no place of business or permanent representative in Türkiye, provided the price is brought into Türkiye in foreign currency. If the conditions turn out not to be met, the buyer is jointly liable with the seller for the VAT, the tax loss penalty and late payment interest, and if the property is sold within three years, the VAT not collected must be paid with deferral interest before the title deed transfer. The documents, timing and refund route for this exemption are covered in detail on our VAT exemption services page.
A few other provisions often matter to foreign clients. Article 13(l) exempts preventive, diagnostic, treatment and rehabilitation services provided within licensed health institutions to foreign individuals not settled in Türkiye, although other goods and services supplied alongside them are taxed. Article 17(4)(ı) exempts services rendered in special economic zones. Article 13(b) exempts services provided at ports and airports to sea and air transport vehicles, but since Law No. 7524 of 28 July 2024, private boats and yachts and vessels used for excursion, recreation, sport and amateur fishing are no longer treated as sea transport vehicles for this purpose, so yacht owners pay VAT on marina services. Where a transaction does not fit neatly into one of these categories, our tax law team can review the contract before it is signed.
The general rate is 20%, with reduced rates of 10% and 1% for goods and services listed in the annexes to Decision No. 2007/13033. These rates have applied since 10 July 2023.
KDV stands for katma değer vergisi, the Turkish name for value added tax. It is governed by the Value Added Tax Law, Law No. 3065.
No general threshold exists: anyone carrying on a commercial or professional activity in Türkiye is a VAT taxpayer from the start. Only specific groups, such as simplified method traders, are exempt.
The No. 1 return is filed and paid by the 28th of the month after the period, and the No. 2 return for withheld or reverse charge VAT by the 25th. The Revenue Administration sometimes extends these dates for a particular month.
Usually not, because the Turkish business pays the VAT under the reverse charge in Article 9. A foreign provider of electronic services to private individuals in Türkiye, however, must register and pay the VAT itself.
Yes, Article 29(1)(ç) allows the VAT declared and paid on the No. 2 return to be deducted on the No. 1 return. The deduction is lost if the VAT was never declared.
Not if the client is a customer abroad within Article 12(2) and the service is benefited from abroad. If the service is used in Türkiye, for example work on a Turkish property, VAT is normally due.
The invoice total must exceed 1,000 Turkish Lira excluding VAT under the current communiqué, effective from 1 February 2024. The goods must be bought from an authorised shop and taken out of Türkiye.
Generally no, because the scheme is limited to passengers who are not resident in Türkiye. Someone living in Türkiye should not expect to qualify.
No, there is no general refund procedure for foreign businesses. Refunds exist only, subject to reciprocity, for transport activities and for participation in fairs, festivals and exhibitions.
No, a private individual selling property outside a business activity does not charge VAT. VAT arises when the seller is a developer or a company.
It is 1%, 10% or 20%, depending on the building licence date, the net area and, for older projects, location and land value. The contract should state the rate and whether the price includes VAT.
No, letting property outside an economic enterprise is exempt under Article 17(4)(d). The rent is still subject to income tax.
Yes, if they qualify under Article 13(i): first delivery, price brought in foreign currency and a buyer not settled in Türkiye. Selling within three years requires paying the VAT with interest before the title deed transfer.
VAT in Türkiye rests on a short list of rules that do most of the work: a 20% general rate with 10% and 1% reduced rates, registration from the first taxable activity with no turnover threshold, monthly returns due by the 28th, a reverse charge on services bought from abroad, an export exemption with a refund right for qualifying goods and services, a refund at the border for visitors, and specific rules for property sales, rentals and foreign buyers. Most of the costly mistakes we see come from the borderline cases: a service treated as exported although it was used in Türkiye, a reverse charge that was never declared, a property sold within three years of a VAT exempt purchase, or a rate taken from a price list rather than from the current decision.
If you run a company in Türkiye, sell services to Turkish clients, plan an export structure or are buying or selling property and want the VAT position checked before you sign, you can contact our legal team.
